Wednesday, March 23, 2011

Star Scientific says 2 products outside tobacco law, shares rise

Very significant news out of my spec portfolio this morning about Star Scientific (CIGX):

(Reuters) - Star Scientific Inc said U.S. health regulators informed the company that two of its products do not come under a federal law that restricts the sale of tobacco products, clearing the way for Star to market them.

Star shares were up 5 percent at $3.83 in morning trade on Nasdaq. Earlier in the session, they rose as much as 16 percent to $4.19, their highest in nearly two years.

Star, which makes dissolvable tobacco products, said it plans to move forward with the marketing and distribution of the products, Ariva and Stonewall.

I'm wondering now if the reason there was a large amount of insider buying of CIGX shares earlier this month (click here to read my prior post on that) was that the folks at Star were advised earlier that their products fall outside of the scope of the regulations in question. I don't know what specific response deadlines would have been involved here, but I do know that the FDA must give responses to such things within stated time frames. It's entirely possible that all of that insider action was timed around both of these key pieces of information.

I was once part-owner of a nutrition supplement shop, and from that experience I know that such products that fall outside of FDA oversight need only avoid doing two things: 1) avoid making people ill, and 2) do not make specific claims of treating diseases or health-related conditions. Saying something on your label like "reduce tobacco cravings" and also stating "this product is not intended to diagnose, treat, cure or prevent any disease" would be fine. This gives Star Scientific a lot of room to maneuver and market within.

I continue to look forward to the future of this stock. There's no guarantees of success down the road - there never is - but this is a promising development. Star Scientific already has moved to tap social media by utilizing a Facebook group to promote one of their products, CigRx; hopefully this is an early indication of a move toward smart, cost efficient and effective promotion.

As always, do your own due diligence before buying or selling this stock or any sort of investment. I'm not giving advice to do either, here.

Monday, March 21, 2011

NanoViricides Reports Treatment with its FluCide Drug Candidate Achieves Dramatic Full Survival in Recent H1N1 Influenza Lethality Study

I found this exciting piece of news about a company in my spec portfolio, NanoViricides, Inc., this morning:

NanoViricides, Inc. (OTC BB: NNVC.OB) (the "Company") reported dramatically improved antiviral efficacy with its optimized FluCide™ drug candidates in its most recent animal study. In the influenza mouse lethal infection model, animals treated with one of the optimized FluCide™ nanoviricide drug candidates survived beyond the stated full duration of study (21 days), and those treated with two additional drug candidates survived almost the full duration of the study. Animals in these three groups survived significantly longer (20.2 to 22.2 days) as compared to the animals treated with Oseltamivir (Tamiflu®; only 8.3 days).

The quick explanation of what NanoViricides is making: injectable cell decoys that trick viruses into attaching to them and destroying themselves as they would in the process of infecting living cells. To become resistant to such an attack, a virus would have to mutate in such a way that it could no longer infect living cells, an evolutionary dead end.

This study is purposefully designed to be 100% fatal within five days, and yet these mice survived the full three weeks of it. Just imagine what these drugs could potentially do for people and animals suffering from normal infections (or, better yet, how quickly outbreaks could be halted were these nanoparticles administered prophylactically).

As always, do your due diligence if this interests you. I'm long shares of NNVC and I am making no recommendation to buy nor to sell.

Saturday, March 12, 2011

Nuclear Terror In Japan: Building A Case For Thorium

One of the holdings in my spec portfolio is Lightbridge Corporation (LTBR), a U.S. company that is behind revolutionary nuclear power plant fuel rods that utilize thorium to generate power.

The emergency unfolding in Japan right now amongst that country's quake damaged nuclear power plants is basically due to the fuel they use, uranium.

Without getting into the step-by-step specifics of the reaction chain, here's the critical difference to understand about a uranium fuel versus a thorium fuel: the uranium reaction is self-perpetuating (which is why there's so much concern about coolants to prevent a meltdown), but the thorium reaction is not self-sustaining and will fizzle out on its own if it is not deliberately sustained.

My guess here is that come Monday, LTBR shares will experience a panic dump because of today's events. I'm going to keep my eye on it and maybe add to my position.

As always, do your due diligence and make up your own mind about this stock. I'm not making a recommendation about what you should do one way or another.

Sunday, March 06, 2011

Corrected: Star Scientific CEO And Others Put $9 Million Into Company

**I got someone's attention on the Yahoo Finance message board attached to CIGX and this post was linked there twice. Through one of the threads, I learned that I misread the summary 8K discussed here. $9 million was put into Star Scientific, but $1 million is the sum total that came from the CEO, Jonnie Williams. This doesn't change my conclusion as to the significance of the action, however. Added/altered text is in bold, retractions are struck out.

On Friday Star Scientific, Inc. (CIGX) filed an 8-K with the SEC detailing a very interesting insider transaction: the CEO, Jonnie R. Williams and others together purchased $9 million worth of company stock and warrants.

What's the significance? On the Yahoo Finance message boards for CIGX, there's been some back and forth on that. Some are calling this a desperate last resort financing tactic for a company out of gas, on the brink and unable to find a lender anywhere else. Others think this is a sign that good things are on the horizon.

Who to believe? I decided to do some research on Mr. Williams to try and figure that out. It turns out that Williams has been involved in very successful laser vision correction companies in the past. What does this have to do with Star Scientific? Nothing directly, obviously. (Vision correction and tobacco? What could possibly be the link?) It does suggest, however, that Williams successfully identified and backed a big winner in the past.

It's been in the news recently that a nicotine derived creation of Rock Creek Pharmaceuticals, a wholly owned subsidiary of Star Scientific, will be tested by the Roskamp Institute in a three month trial to study its usefulness in combating inflammation, and in particular Alzheimer's disease. But there's also older news out there about Star Scientific's efforts to get approval from the FDA to market its dissolvable tobacco products as being less harmful than other tobacco products on the market. Could those efforts be coming close to fruition?

It seems to me that there are several good things lining up for Star Scientific right now. The timing of all of these events together suggests to me that Williams and the other parties to this transaction didn't buy more company stock because Star Scientific had no other options. Mr. William's salary as the CEO of Star Scientific is reported to be slightly more than $1 million annually (as of 2009, by this source). If the company was doing poorly, it would make zero sense for Williams to put nine times his annual salary into it (not to mention the other parties, who contributed the other $8 million together). If Star Scientific were to become a buyout target, Williams would do much better owning more stock in the company than he would otherwise (especially if a buyout were to also end his $1 million annual compensation!). It certainly seems possible to me that such a thing could come to pass. If you were a giant tobacco company and a tiny rival managed to get the FDA to allow it to advertise its product as being less harmful than yours, how quickly would you move to acquire the rights to the process that creates that product and how much would you have to pay to outbid your rivals? Could be quite a bit!

I'm long CIGX in my speculation portfolio and plan to stay that way. I'm not recommending that you buy or sell CIGX. Do your due diligence and make up your own mind as to whether or not this investment makes sense for you.

Further reading, the full 8-K filing:

The other three parties to this transaction do not appear to be direct holders, which would further undermine the "CEO as lender of last resort" speculation since these are outside parties not drawing regular compensation from the company (not to mention the basic fact here, that the presence of the other three parties in the transaction makes that claim nonsensical). It cannot be the case that they're funneling money into the operation in a desperate move to keep their own meal ticket going.

Mr. William's personal participation in this particular transaction is vastly less than I mistakenly thought it to be initially, but his aggregate purchases of company stock over the last couple of years are greater than this transaction alone, and my thoughts on the question remain the same: unless good things are on the horizon, why keep buying in? Why would you put your entire annual salary back into the company you draw it from if things are bad when the company can attract $8 million of investment from others? Unless something good is coming, it wouldn't make any sense.

Friday, March 04, 2011

More Spec Portfolio News: EastBridge Investment Group Announces Stock Dividend of Alpha Lujo Stock

I'm a bit behind the ball on this one. It escaped my attention for a few days because I normally rely on Yahoo Finance to track my portfolios, but there's some confusion about this stock, EastBridge Investment Group, over there right now. Due to the last of their market makers moving to OTC Markets, Yahoo Finance is treating this as an "abandoned stock", relegating it to the pink sheets there. Not so, this is a misunderstanding created by a software glitch; EastBridge is still a full-reporting company.

This is another one I keep in my speculation portfolio, which is a collection of rolls of the dice that I like to make (the portfolio gets just 20% of my cash available for investing, not betting the farm here!).

EastBridge basically helps companies, most of them in Asia, get listed on U.S. exchanges, amongst other services. In exchange, EastBridge receives cash and stock compensation. They then turn around and spin off portions of their equity holdings to EastBridge shareholders. It's a stock that one can buy and eventually end up owning shares in a number of companies, by design.

The latest news is that one of these spin off events is on the horizon:

PHOENIX, AZ--(Marketwire - March 1, 2011) - EastBridge Investment Group (EBIG) (OTCBB: EBIG) (OTCQB: EBIG) today announced that it has scheduled to distribute 1,000,000 shares of its US stock ownership in Alpha Lujo, Inc. ("ALEV") to its shareholders for no consideration. All shareholders of EBIG stock on the closing date of March 31, 2011, will receive on a pro rata basis, their allocated shares of Alpha Lujo stock after this dividend registration is filed and approved by the SEC. The size of this dividend represents about 5% of Alpha Lujo, Inc.'s capital stock equity as of today.

Mr. William Tien, CEO of Alpha Lujo, commented, "We see a lot of opportunities in the electrical vehicles business in China, Australia and the USA. We are accelerating our pace to capture the opportunities in the electrical vehicles and advanced batteries businesses. We are in the process of completing the merger of the electrical vehicle entities and Alpha Lujo."
This is but one of several spin offs I'm now in line for as a holder of EBIG shares. Will any of these companies ever amount to anything, or will EastBridge for that matter? I have no idea. Like I said, this is in my spec portfolio. (In this case, it really doesn't matter to me because I recovered my initial capital from this position a long time ago. The last time it spiked around 400% over my cost basis I sold just enough shares to get my initial purchase amount back out - I'm playing with the house's money here). I'm not making a recommendation to buy or to not buy EBIG. Do your homework, make up your own mind about it.

Thursday, March 03, 2011

Spec Portfolio Addition: Star Scientific, Inc.

This one, Star Scientific (CIGX), caught my eye recently. I sold off a small position I had in Telecom Italia for a tidy little gain and picked up some shares here.

The story on CIGX that caught my eye was this: Star Scientific Just Announced They Cured Alzheimer's Disease and Nobody Cares. A wing of CIGX isolated a compound from nicotine called anatabine that shows promise as a super anti-inflammatory, so they say...

The rest of the company is pretty interesting, too. Imagine a tobacco product producer that operates on the premise that their product does cause harm to its consumers, and thus they are out to reduce or eliminate the harm. Now that's different! This has led them to develop tobacco curing processes that inhibit the formation of certain toxic compounds in the finished products, dissolvable smokeless products, etc.

People love tobacco and they want it, no doubt about it. Smokers are harassed in numerous ways these days, but world-wide consumption is rising, not falling (that's one of the trends in developing economies - more disposable income means people tend to want more recreational drugs). If tomorrow someone came up with a cure for all smoking-related diseases, no doubt people would rush out and start up a new habit. That's tackling the issue from the "back end," so to speak; this company's approach is starting from the other end. Perhaps the two will meet somewhere in the middle?

I'm not recommending anyone buy this stock. There's a reason it's in my speculation portfolio! Do your due diligence and make up your own mind about it.

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